Tesla Battery Report Predictions

There is a 39 page Tesla Battery Report by Total Battery Consulting Inc.

Tesla Gigafactory

* It represents a huge risk and a tremendous amount of cash investment
* It depends largely on Panasonic’s willingness to invest
* If 35 GWh are indeed installed and utilized, pack pricing for the 2025 time scale could be as low as $167/kWh, $8,400 for a 50-kWh battery and $11,700 for a 70-kWh pack
* Battery cost per kWh will go up slightly in 2017 due to high depreciation charges, but larger capacity per cell will neutralize the increase by 2018
* Tesla’s 35-GWh plant will be about 10X larger than any existing plant

* Pack cost much below $200/kWh is unlikely before 2020, which brings the cost of the proposed 70-kWh pack for a 240-mile D class EV to $14,000 (or higher). Tesla could offer an entry-level version with 45-50kWh (at $9K to $10K per pack) but such a vehicle would not quite attain 200 miles per charge in most real-life driving conditions

In 2025, they could get to a cost of $117 per kWh.

* Panasonic will increase capacity in Japan from 4 GWh today to 7 GWh by 2016
* Or, alternatively, Tesla will fill the gap with cells from Samsung or LG Chem of Korea
* Tesla will build the infrastructure for a 35-GWh plant but will furbish it and install production lines in stages. The first stage on the order of 7 GWh will be completed by the end of 2016
* The gigafactory will expand in several stages in increments of 7 GWh every two years to reach 35 GWh in 2025

The price of the 2017 new model 3 (prior to government incentives) will be in the range of $45-75K;

If sales in China are significant, the total sales number for Tesla may exceed 200,000 by 2020 but Tesla will have to shift some production to China. The expectation is for Tesla sales to be 60,000 in 2015.

Lux Research analysis of the Gigafactory is similar

Lux Research projects sales of “only” 240,000 Tesla cars in 2020, leading to razor-thin margins to Panasonic and 57% overcapacity. Tesla is targeting 500,000 cars.

The Gigafactory will only reduce the Tesla Model 3’s cost by $2,800.

Cost-cutting is the name of the game, but the Gigafactory does not do enough. Battery prices need to fall dramatically if plug-in cars hope to break beyond their current niche. The OEMs backing the U.S. Advanced Battery Consortium are targeting $125/kWh by 2020 – more than four times lower than $520/kWh, the price Ford paid for its Focus EV battery packs. Currently, Tesla has the lowest cost – about $274/kWh, according to Lux Research analysis. Tesla founder Elon Musk aims to cut cost by 30%, on the strength of scale, location and technology, lowering the price to $196/kWh with the Gigafactory.

Panasonic faces risks. The Gigafactory might seem like a great win for Panasonic, ahead of rivals such as Samsung SDI, LG Chem, and NEC. But in reality the Japanese company faces high risks. In the optimistic scenario of Tesla attaining its targeted half a million EVs, Panasonic could rake in more than $15 billion between 2017 and 2020. But at the more likely 240,000 EVs, as estimated by Lux Research, Panasonic would take in only $7 billion on its likely investment of $1.4 billion, with questionable margins.

Gigafactory will lead to huge overcapacity. The Gigafactory, proposed to be built at a cost of $5 billion, is designed to make 35 GWh Li-ion cells for half a million EVs. But in the likely event of much lower sales of 240,000, overcapacity will be to the extent of 20 GWh. This 57% overcapacity is unlikely to be filled either by rival carmakers or Tesla’s own plans to sell some stationary battery packs to developers like SolarCity for residential photovoltaic integration and other uses.

Solarcity currently has over 110,000 customers (end of Q1 2014) and they are targeting 1 million customers by 2018 SolarCity 17,664 new customers connected to the sun and 82 MW deployed in the first three months of 2014. The total number of SolarCitycustomers by the end of March exceeded 110,000. By the end of 2014 they should have about 200,000.

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